The retail group of Arcadia owned by Sir Philip Green is facing an important week as creditors are ready to vote for his proposed plans of restricting on Wednesday. If his proposals are not backed by Pensions Regulator and landlords to cut rents and shut stores, the giant could get into administration.
Around 50 shops in UK are due for shutting down and MPs want Sir Philip to fund the company’s pension scheme using his wealth. Arcadia chains have Burton, Topshop, Dorothy Perkins and Wallis.
These measures are looked upon as the company’s final effort to either break up or push off administration. Presently Arcadia has 560 shops across Ireland and the UK, and it employs around 22,000 staff.
The firm had initially announced that it would shut down 23 stores for rescue deal, which is known as CVA (Company Voluntary Arrangement). Then it was known that under other proceedings of insolvency, the company would shut another 25 stores. Second round of shutting down its stores would affect Evans, the clothing chain of plus size and Selfridge stores, six Miss.
The recent closures will add to 200 stores in the UK that were shut down over last three years.
Under CVA, Arcadia is seeking to reduce by half the contributions to the company’s pension funds, with £750m deficit, to £25m yearly. But, Tina Green, wife of Sir Philips, who is the key shareholder of Arcadia, has offered providing an additional £100m into these schemes for coming three years.
Nevertheless, Pensions Regulator, which can block CVA, said that it is doubtful about the plans that would adequately protect employees’ pensions.
Frank Field, MP and chairman of Committee of Commons’ Work and Pensions has asked Sir Philip to hold up the pension fund using his own money. Sir Philip is seeking rent reductions for 200 shops and he has given an offer to landlords a stake of 20% of any proceeds in case the group is sold.